Earlier this year, the FCA announced its intention to undertake a multi-firm review of MPS[1]. While waiting for the regulator to reveal their findings may not be keeping you awake at night, it will be an important test of how firms have adapted their services to deliver good client outcomes post-Consumer Duty.
The regulator’s Asset Management supervisory letter back in February said, following the growth of MPS, it was conducting the review “to provide confidence that investors are receiving good outcomes from MPS and share good practice on how firms are doing this”.
The MPS market is growing at pace, according to the lang cat’s 2025 State of the Advice Nation report, 43% of firms outsource to an MPS provider, making it the dominant type of Centralised Investment Proposition (CIP), with adviser-run models in second place with 31%. Although the rankings were the same in 2024 research, they were much closer, at 38% and 35% respectively.
Demand for MPS is fuelled largely by the increasing regulatory challenge facing advisers. Consumer Duty has added to the administrative burden, particularly around ongoing monitoring and reporting. While outsourcing doesn’t remove these requirements, it does lighten the load. Copia’s own adviser research found that firms running their CIP in-house spend 139 days on investment management, compared to 32.5 days for those who outsource[2].
By using the right MPS, advice firms can leverage specialist investment expertise without adding to internal overheads. In addition, a DFM partner can provide access to more focused investment research, market information and cheaper share classes that would be out of reach for firms running in-house models. For firms, the right strategic partnership can deliver operational efficiency for the firm, alongside better outcomes and value for money for the client.
However, not all MPS are created equal. We welcome greater scrutiny of the market to ensure the way advisers research, select and use MPS satisfies the specific requirements of their client base.
Ahead of the review, it’s worth considering the Consumer Duty requirements around MPS.
Clearly Defined Roles
One of the benefits of the Consumer Duty legislation is the clarity it provides on the responsibilities of different organisations within the value chain.
The regulations set out three specific roles:
· Distributors (aka advisers), who propose and advise but do not influence investment construction
· Manufacturers (fund managers, DFMs, investment platforms and advisers running their own money), who provide products and services
· Co-manufacturers, who determine or materially influence the manufacture of a product or service
Staying in the Driving Seat
For advisers, the role of co-manufacturer offers a pathway to retaining greater control of the investment process, while continuing to benefit from the advantages of outsourcing portfolio management. Custom MPS mandates provide a tailored solution where the advice firm inputs into the design of the investment in partnership with the DFM. It allows the adviser to take charge of ascertaining client investment strategy, and the DFM for structuring and delivering it.
This partnership approach affords advice firms greater control over the client experience, while also providing the in-house team with the space for more in-depth conversations to gather better and more nuanced information.
With a deeper understanding of the client’s financial position, objectives, risk tolerance and capacity for loss, as well as their ethical investing principles, lifestyle needs and vulnerability issues, it’s possible to take a more tailored approach to investing, supporting stronger client relationships and better outcomes.
I hope part of the good practices in this review will be dedicated to showing the importance of thorough due diligence when selecting an MPS partner. Some providers have more expertise in certain market areas, some may be more focussed on ethical concerns, and some can offer advisers a more flexible and collaborative approach tailored to the specific requirements of their client base.
I think a large part of the rise in adoption of MPS relates to firms’ efforts to meet the requirements of Consumer Duty. As more firms look to outsource investment management, it’s right to apply more regulatory rigour to the process around selecting MPS solutions and the firms that provide them to ensure that investors achieve good outcomes.
[1] https://www.fca.org.uk/publication/correspondence/asset-management-alternatives-portfolio-letter-2025.pdf
[2] https://copia-capital.co.uk/2024-adviser-research-an-overheating-cip-2024-ways-to-cool-the-engine/
25th July 2025
What can we expect from the FCA’s review of MPS?
Earlier this year, the FCA announced its intention to undertake a multi-firm review of MPS[1]. While waiting for the regulator to reveal their findings may not be keeping you awake at night, it will be an important test of how firms have adapted their services to deliver good client outcomes post-Consumer Duty.
The regulator’s Asset Management supervisory letter back in February said, following the growth of MPS, it was conducting the review “to provide confidence that investors are receiving good outcomes from MPS and share good practice on how firms are doing this”.
The MPS market is growing at pace, according to the lang cat’s 2025 State of the Advice Nation report, 43% of firms outsource to an MPS provider, making it the dominant type of Centralised Investment Proposition (CIP), with adviser-run models in second place with 31%. Although the rankings were the same in 2024 research, they were much closer, at 38% and 35% respectively.
Demand for MPS is fuelled largely by the increasing regulatory challenge facing advisers. Consumer Duty has added to the administrative burden, particularly around ongoing monitoring and reporting. While outsourcing doesn’t remove these requirements, it does lighten the load. Copia’s own adviser research found that firms running their CIP in-house spend 139 days on investment management, compared to 32.5 days for those who outsource[2].
By using the right MPS, advice firms can leverage specialist investment expertise without adding to internal overheads. In addition, a DFM partner can provide access to more focused investment research, market information and cheaper share classes that would be out of reach for firms running in-house models. For firms, the right strategic partnership can deliver operational efficiency for the firm, alongside better outcomes and value for money for the client.
However, not all MPS are created equal. We welcome greater scrutiny of the market to ensure the way advisers research, select and use MPS satisfies the specific requirements of their client base.
Ahead of the review, it’s worth considering the Consumer Duty requirements around MPS.
Clearly Defined Roles
One of the benefits of the Consumer Duty legislation is the clarity it provides on the responsibilities of different organisations within the value chain.
The regulations set out three specific roles:
· Distributors (aka advisers), who propose and advise but do not influence investment construction
· Manufacturers (fund managers, DFMs, investment platforms and advisers running their own money), who provide products and services
· Co-manufacturers, who determine or materially influence the manufacture of a product or service
Staying in the Driving Seat
For advisers, the role of co-manufacturer offers a pathway to retaining greater control of the investment process, while continuing to benefit from the advantages of outsourcing portfolio management. Custom MPS mandates provide a tailored solution where the advice firm inputs into the design of the investment in partnership with the DFM. It allows the adviser to take charge of ascertaining client investment strategy, and the DFM for structuring and delivering it.
This partnership approach affords advice firms greater control over the client experience, while also providing the in-house team with the space for more in-depth conversations to gather better and more nuanced information.
With a deeper understanding of the client’s financial position, objectives, risk tolerance and capacity for loss, as well as their ethical investing principles, lifestyle needs and vulnerability issues, it’s possible to take a more tailored approach to investing, supporting stronger client relationships and better outcomes.
I hope part of the good practices in this review will be dedicated to showing the importance of thorough due diligence when selecting an MPS partner. Some providers have more expertise in certain market areas, some may be more focussed on ethical concerns, and some can offer advisers a more flexible and collaborative approach tailored to the specific requirements of their client base.
I think a large part of the rise in adoption of MPS relates to firms’ efforts to meet the requirements of Consumer Duty. As more firms look to outsource investment management, it’s right to apply more regulatory rigour to the process around selecting MPS solutions and the firms that provide them to ensure that investors achieve good outcomes.
[1] https://www.fca.org.uk/publication/correspondence/asset-management-alternatives-portfolio-letter-2025.pdf
[2] https://copia-capital.co.uk/2024-adviser-research-an-overheating-cip-2024-ways-to-cool-the-engine/